As legal counsel for Life Partners, Inc., I am writing about the defamatory article on your website, at the following URL:
http://www.josephmbelth.com/2014/02/no-29-federal-jury-finds-life-partners.html.
http://www.josephmbelth.com/2014/02/no-29-federal-jury-finds-life-partners.html.
My post No. 29 was not and is not defamatory.
Your article reports that the jury returned a verdict on February 3, 2014, in a civil lawsuit brought by the Securities and Exchange Commission (SEC) against Life Partners and three of its executive officers. At the outset, I should point out that the terms "guilty" and "not guilty" are applicable to criminal prosecutions, but not a civil action such as the case against Life Partners.
It would have been more precise for me to refer to the jury findings as "yes" or "no" on each question of whether Life Partners and its officers "violated" federal securities laws and regulations.
More importantly, however, in keeping with journalistic standards, it is reasonable for Life Partners to expect that you will update your reporting to inform your readers that Life Partners has been cleared of all fraud charges asserted by the SEC. As you are probably aware from recent news reports, on March 12, 2014, the United States District Court for the Western District of Texas ruled that the SEC failed to prove any of its fraud claims against Life Partners and its CEO, Brian Pardo, and General Counsel, Scott Peden. The ruling followed a jury finding in February that neither Life Partners, Mr. Pardo, nor Mr. Peden committed securities fraud under Rule 10b-5 and that Mr. Pardo and Mr. Peden did not engage in insider trading.
From court records I was aware of the March 12 ruling and I intended to post a follow-up soon. Because The Wall Street Journal reported the ruling immediately, I felt no urgency to report it quickly. Given the Mackenzie letter, however, I will reply to his comments rather than prepare a separate post. When further important developments in the case occur, I will report them. I do not operate a daily newspaper, and lately I have been posting one item per week. A majority of my posts are on subjects other than Life Partners. On March 17, however, I posted No. 36 about an Oregon consent order directed at a Life Partners agent in connection with securities violations. I think the case is important and to my knowledge it has not been reported in the major media.
Although the jury had found in favor of the SEC's fraud claim under Section 17(a) relating to the company's revenue recognition policies, that claim, which a government attorney characterized as "a lead" claim in the case, was challenged by Life Partners on the basis that it was not supported by any evidence. Senior U.S. District Judge James R. Nowlin agreed with Life Partners that there was no evidence to support the revenue recognition claims for the period of time in question and ordered that judgment be entered in favor of Life Partners, Mr. Pardo, and Mr. Peden on that issue. As a result of this ruling, the Company, Mr. Pardo, and Mr. Peden have been completely exonerated from any allegations of fraud alleged by the SEC. The Court let stand the jury's findings against Life Partners relating to bookkeeping, reporting and certification by the CEO on the company's financial statements, none of which involve fraud or knowingly or recklessly misleading shareholders.
If I had posted a follow-up, I would have said Judge Nowlin rejected one jury finding of violations and retained three jury findings of violations. I also would have said that the text of LPHI's 8-K (material event) report filed with the SEC on March 14 did not describe the ruling, that the text of the 8-K merely referred to an attached press release, that the press release was entitled "Life Partners Cleared of All Fraud Claims," that Judge Nowlin's retention of three jury findings of violations was not mentioned until the third paragraph of the press release, and that the press release was posted on LPHI's website.
Because Life Partners has now been cleared of all fraud charges asserted by the SEC, I am requesting, on behalf of Life Partners, that you correct the statements on your website that have now become misleading and set the record straight. Your prompt attention to this matter is greatly appreciated.
My statements were not and are not misleading or incorrect.